Microenterprise Lending to Female Entrepreneurs: Sacrificing Economic Growth for Poverty Alleviation?

Abstract

This research compares the performance of female and male entrepreneurs in a microenterprise credit program in Guatemala. Previous research and field practice has suggested that targeting credit at female borrowers allows for more substantial increases in household welfare, but that male entrepreneurs may more aggressively expand enterprises when given access to credit. In this paper, we develop a model that seeks to clarify why we might expect gender differences in economic responses to credit access. In general, our empirical results reveal that gender differences in economic responses to credit access are surprisingly small. However, we find that female entrepreneurs in childbearing years exhibit significantly lower rates of employment generation than male entrepreneurs, a fact consistent with our model.

Keywords: Central America, Guatemala, Microenterprise Finance, Gender Issues

JEL Classification: O12, O16